Zoom has seen one of its worst financial quarters since going public during the pandemic.
Key details
Zoom’s shares were up 9% over the last three months, but they are down 71% over the last 12 months, as of Monday.
The video-conference provider is diversifying and showing growth in new areas such as Zoom Phone, but investors seem to be concerned after Zoom announced changes to its current model. Shares in the company were falling Tuesday after announcements about changes, Market Watch reports.
The company is anticipating a 7% to 8% drop in online business this fiscal year, but also expects a 20% growth in its enterprise business.
In addition to fewer remote workers, Zoom now has to deal with competition from companies like Microsoft Teams and Google Meet.
Zoom’s newer products like Zoom Phone and its customer-experience services are seeing some momentum, though it may not be enough.
Why it’s news
The video-call service came to the rescue during unexpected remote work and school during the pandemic. Now it’s facing new challenges.
As more companies return to in-person work, there is less need for Zoom’s video conferencing services. Analyst James Fish says that the company may need to burn through more cash and expand more quickly. Fish lowered his price target from $115 to $91.
Some analysts, such as Evercore ISI analyst Peter Levine, seem a little more positive. He thinks the company’s Zoom Phone and Contact Center customer-experience could give the company a boost. Potentially, the Zoom Phone could contribute 10% of Zoom’s revenue by the end of 2024, but Levine doesn’t expect any immediate positive changes, Market Watch reports.
Levine lowered his price target from $105 to $95.
Notable quote
Though analysts have slightly varying outlooks on Zoom’s future, most agree that Zoom may soon see some struggles.
Piper Sandler analyst James Fish says, “In our opinion, this was one of the worst quarters Zoom has reported since going public, as the macro environment is clearly challenging Zoom in addition to the competitive landscape (i.e. Teams).”
